Dire warning 'hardly anyone' will be eligible for JobKeeper 2.0 when the coronavirus subsidy is slashed next week - as expert reveals why it's a 'ticking time bomb' for Australia

Experts are warning 'hardly anyone' will be eligible for JobKeeper 2.0 when the coronavirus wage subsidy is slashed next week as part of a six-month extension. 

From September 28, payments for full-time staff are being cut from $1,500 to $1,200 a fortnight, as those working less than 20 hours a week receive just $750.

More than two million workers are coming off JobKeeper from next week - despite Australia being in recession for the first time in almost three decades.

To be eligible for the first extension of JobKeeper, business owners must demonstrate their actual GST turnover had plunged by 30 per cent in the September quarter.

That will see plenty of struggling businesses miss out, as JobKeeper goes from subsidising the wages of 3.5million workers to just 1.4million Australians from next week.

From January, that will be reduced to one million as part of a plan to phase it out completely by March - as JobKeeper covers just 7.9 per cent of Australia's 12.6million workers during its final three months.

Accountant Ben Johnston Johnston Advisory warned 'hardly anyone will be eligible' for JobKeeper under the new rules.   

From September 28, payments for full-time staff are being cut from $1,500 to $1,200 a fortnight, while people who usually worked less than 20 hours a week before the pandemic will receive just $750

Accountant Ben Johnston Johnston Advisory warned 'hardly anyone will be eligible' to claim the subsidy due to sweeping new criteria

'The numbers speak for themselves – I reckon only about a third of current JobKeeper recipients will be eligible come October,' Mr Johnston told news.com.au.

'So many more businesses will be left to fend for themselves. There has been an artificial influx (of money) into the economy, and once that is taken away, it will be really telling to see if businesses can survive on their own two feet.'

Mr Johnston said the changes were a 'ticking time bomb' and claimed the government is tightening JobKeeper eligibility too soon.

'It should have remained at least through the Christmas trading period, when having more money flowing through the economy would have boosted retail sales as well,' he said.

Almost 3.6 million people have received the fortnightly payments throughout the pandemic.

That number is expected to drop to 2.24 million in the December quarter as businesses whose turnovers have improved 'graduate' from the scheme.

It is tipped to tumble to 1.75 million in the first three months of next year.

The Morrison government is also preparing to slash JobSeeker booster payments from the end of this week.

People on the unemployment benefit have since March received an extra $550 per fortnight through a coronavirus supplement.

That is being reduced to $250 a fortnight from this Friday and is scheduled to be scrapped altogether at the end of December.

Senator Ruston said the increased dole payment would be extended into next year if required.

The Morrison government is also preparing to slash JobSeeker booster payments from the end of this week

JobKeeper recipients on $1,200 per fortnight may be eligible for a partial dole payment, lifting their total income to $1476

'I want to assure all Australians, if elevated supports are continued to be needed, they will be made available,' she told reporters.

Anyone anxious about having their JobKeeper payment slashed is being told to apply for the dole.

Social Services Minister Anne Ruston is encouraging people to top up their payments with unemployment benefits.

'We have temporarily put arrangements in place so that our social security safety net is not just for people who have lost their jobs,' Senator Ruston said on Monday.

'It is able to provide a cushion for people who have had or fear their hours or income will be reduced.'

JobKeeper recipients on $1,200 per fortnight may be eligible for a partial dole payment, lifting their total income to $1476.

People receiving JobKeeper at the part-time rate of $750 per fortnight could receive another $546 in unemployment benefits, boosting their incomes to $1295.

JobKeeper 2.0 eligibility criteria  

From 28 September 2020 to 3 January 2021, JobKeeper payments will be $1,200 a fortnight for eligible full-time workers and eligible business participants. 

Eligible employees and eligible business participants that worked fewer than 20 hours a week will receive $750 per fortnight.

JobKeeper payments will be further reduced starting on 4 January 2021. From 4 January 2021 to 28 March 2021 eligible fulltime workers and eligible business participants will receive $1,000 a fortnight. 

Eligible employees and business participants that worked less than 20 hours a week will receive $650 a fortnight.

In order to determine how many hours that an eligible employee has worked, the four weeks for pay periods before either 1 March 2020 or 1 July 2020 will now be assessed (it is proposed that the period with the higher number of hours worked is to be used for employees with 1 March 2020 eligibility). 

Eligible business participants will be entitled to the higher rate where they were actively engaged in the business for 20 hours or more per week on average.

JobKeeper extension 1: 28 September 2020 to 3 January 2021. 

You will need to show that your actual GST turnover has declined in the September 2020 quarter relative to a comparable period (generally the corresponding quarter in 2019).  

The rates of the JobKeeper payment in this extension period are:

- Tier 1: $1,200 per fortnight (before tax)

- Tier 2: $750 per fortnight (before tax).

JobKeeper extension 2: 4 January 2021 to 28 March 2021. 

You will need to show that your actual GST turnover has declined in the December 2020 quarter relative to a comparable period (generally the corresponding quarter in 2019). 

You can be eligible for JobKeeper extension 2 even if you were not eligible for JobKeeper extension 1. 

The rates of the JobKeeper payment in this extension period are: 

- Tier 1: $1,000 per fortnight (before tax)

- Tier 2: $650 per fortnight (before tax).